More capital has been destroyed by the airline business than by any other business in history. There are times to own them--as trades, not as long-term investments. Demand and fuel costs are the primary impacts on airline stock prices. Demand is good now, but fuel costs are rising, which will become a big negative. In addition, as demand rises, airlines add routes, cut fares, and wipe out their profits. This is a cyclical business. It is best to own an airline that is disciplined, when demand is good and when oil prices are coming down.

In the past, he has favoured WestJet because its management is disciplined, they operated a single type of plane, they had happy non-unionized employees, and they focused on the Canadian market. But then they decided they wanted to be Air Canada. They operate several types and sizes of planes on more routes--if he had to invest in an airline now, it probably would NOT be Westjet. They were the Southwest of Canada but they have destroyed what they had, WestJet’s share price has been drifting sideways while Air Canada’s has been rising. He asserted that WestJet’s problems are all self-inflicted.

The caller was looking for a safer way to invest in cannabis stocks and suggested alternatives to Aurora. Mr. Levine said that he is not sure there’s a safe way to invest in any cannabis stock. He doesn’t own any marijuana stocks and thinks that his clients would rightly fire him if he bought any. The risk profile and volatility of this industry are far too high at this time. Aurora has a market cap of $12 billion against only $50 million in sales. For any rational investor, this makes no sense. It is potentially profitable for short-term trading by a speculator or gambler. He faced the same types of investment risks during the dot-com era and refused to invest in the rapid-growth stocks of that time, which rose dramatically and then went bust. With specific respect to Aurora, he says that the CEO is not a Bruce Linton. He considers the Aurora CEO far too promotional for a $9 billion business.

Asked to compare Enbridge and TransCanada, he said he currently owns only Enbridge. Both are utility companies. Both pay high yields. Their stock prices are very interest-rate sensitive because interest rates drive the relative value of their dividends and because they borrow enormous amounts of money and interest rates determine the cost of carrying these loans. Enbridge focused on growth for a while, making its stock more attractive, but it took on too much debt and has had to focus on dealing with that. He is holding stock in Enbridge for clients who need steady income and he does buy it when the stock price falls too much, but this is, in general, the wrong time to buy utilities. Yield 6%.

Asked to compare Enbridge and TransCanada, he said he currently owns only Enbridge. Both are utility companies. Both pay high yields. Their stock prices are very interest-rate sensitive because interest rates drive the relative value of their dividends and because they borrow enormous amounts of money and interest rates determine the cost of carrying these loans. He holds utility stocks for clients who need steady income but this is, in general, the wrong time to buy utilities.

He likes US banks and prefers them to Canadian banks. US household debt is lower than Canada’s. Interest rates are likely to rise faster in the US than in Canada, which is good for US bank stocks. When 10-year bond rates finally rose higher than 3%, US banks started rising again. He owns two regional US banks and is currently looking at a large US bank. Overall, he likes the sector, including JP Morgan, but he is not planning to buy that particular bank.

He owns it. It pays a dividend that is higher than most other energy companies. In general, oil and gas prices in Canada are depressed by the lack of takeaway capacity. Vermillion benefits from the worldwide rise in oil prices because the majority of its assets are outside of Canada. For an investor who is looking for a Canadian energy stock, he recommends Vermillion.